Nokia CEO Stephen Elop tells his troops that it's time to face the music

It appears that Nokia's CEO has come to the realization that
many of us came to months, if not years ago: Nokia's smartphone efforts are in
trouble. The company has been a bit lacking on the innovation front and has
never quite made its way back into the hearts of the consumer -- especially in
North America -- since the arrival of the iPhone in 2007.

Stephen Elop, a former Microsoft Business Division
executive, took
over Nokia's CEO position back in late September. It didn't take long for
him to see the writing on the wall when it comes to Nokia's position in the
market, and he fired off a memo (which was obtained
by Engadget) to state the sad
position that the company is in. In fact, Elop says that the Nokia is standing
on a "burning platform" and that the company must decide what it wants
to do to stay relevant.

Here are a few highlights from the 1,300+ word memo:

In
2008, Apple's market share in the $300+ price range was 25 percent; by 2010 it
escalated to 61 percent. They are enjoying a tremendous growth trajectory with
a 78 percent earnings growth year over year in Q4 2010. Apple demonstrated that
if designed well, consumers would buy a high-priced phone with a great
experience and developers would build applications. They changed the game, and
today, Apple owns the high-end range… The first iPhone shipped in 2007, and we
still don't have a product that is close to their experience.

Love 'em or hate 'em, it's true that Apple really turned the
smartphone market on its head. Apple knows how to create buzz for its products,
and while the iPhone may not have the most dazzling array of hardware at any
point in time compared to its competitors, the user experience (hardware +
software ecosystem) is hard to fault.

Android
came on the scene just over 2 years ago, and this week they took our leadership
position in smartphone volumes. Unbelievable…

Android
came in at the high-end, they are now winning the mid-range, and quickly they
are going downstream to phones under €100. Google has become a gravitational
force, drawing much of the industry's innovation to its core.

Elop continues in his memo talking about the company’s unhinged
efforts with MeeGo, troubles with Symbian, and the fact that Chinese OEMs
are able to crank out low-cost smartphones at a rapid pace. Basically, Nokia is
being assaulted from all sides and isn't taking enough action to stay relevant.

Nokia's CEO even goes so far as to say that the answer to
Nokia's problems may be to adopt smartphone platform which has a strong
ecosystem (Android, Windows Phone 7 perhaps?). Windows Phone 7 seems like a
good choice given Elop's past ties to Microsoft, but we'll hear a little more
about Nokia's plans for the future on February 11.